How firms' profits grow amid declining shrimp exports

Shrimp exports from Bangladesh have been facing a decline in demand, particularly in European countries, which account for 85% of the country's shrimp exports, largely due to the ongoing Russia-Ukraine conflict.

Despite export setbacks, publicly listed shrimp exporters Gemini Sea Food and Apex Foods have reported double-digit growth in the first half of the current fiscal year.

Gemini Sea Food's profit grew by 80% despite a 21% drop in revenue, while Apex Foods registered a 229% surge in profit amid a 42% fall in revenue.

According to officials, the country's shrimp exports have been declining due to reduced consumption and demand from foreign buyers, as well as a significant drop in prices in the global market, following the world economic crisis.

As a result, local shrimp processors and exporters have been witnessing a significant revenue fall, while some of them have maintained profit growth by cutting or minimising administrative and other costs.

According to the Bangladesh Frozen Foods Exporters Association (BFFEA), the industry was initially hit hard by the Covid outbreak, but in 2021 started to bounce back as the pandemic eased. But the demand declined again after the Ukraine war began.

According to the Export Promotion Bureau of Bangladesh, the country's frozen and live fish exports dropped by 21.65% to $319 million in the first eight months of the current fiscal year.

While shrimp exports fell by 25.48% to $233 million, down from $313 million in the same period of the previous fiscal year.

"The shrimp exports have been falling continuously, and there is no sign of recovery soon," BFFEA President Md Aminullah told The Business Standard. "Mainly due to the war, shrimp exports have been declining as major export destinations of EU countries have been affected much."

"Along with the lower demand in the European market, shrimp prices and export volumes also fell. As shrimp is not an essential food, consumption has declined, and the EU market has yet to improve," he added.

Md Aminullah, who is also managing director of Ark Sea Foods, hopes shrimp exports may improve from June.

According to the BFFEA, 85% of the shrimp exported from Bangladesh goes to European countries, while 15% goes to the US, Japan, and other countries.

Apex Foods' profit increases as costs are reduced

Despite a 41.89% fall in exports, 100% export-oriented shrimp processor Apex Foods has reported more than 200% growth in net profit after tax in the July-December period of the fiscal 2022-23.

According to the company, its revenue has decreased compared to the same period of the previous year as a result of declining demand in the foreign market.

According to its half-yearly financials, the company's administrative and selling overhead costs dropped by 46% and financial expenses by 43% compared to a year ago.

In the second quarter, its revenue fell by 37% to Tk87.55 crore but its profit jumped by 269% to Tk89.57 lakh. At the same time a year ago, its revenue stood at Tk139.15 crore and profit at Tk24.28 lakh.

Gemini Sea Food's revenue fell 45% in Oct-Dec

Gemini Sea Food has witnessed a 45% fall in revenue as its shrimp exports declined in the October-December quarter, while its profit surged by 11% compared to the same period of the previous fiscal year.

Also, in the July-December period, its revenue fell by 21% to Tk40.50 crore while profit surged by 80% to Tk4.33 crore compared to a year ago.

According to the company, its profit increased as the cost of raw materials decreased compared to the previous year.

Regarding the revenue fall, it said the demand and price of black tiger shrimps are under pressure in the global competitive market because of the aggression of new spices Venami.

Tanvir Ahmed Saif, deputy company secretary of Gemini Sea Food, told TBS, "Overall, the country's shrimp export faces a bad situation for the war and the world economic situation."

He said the impact of the export decline on Gemini Sea Food is not the same because its profit margin is much higher than others. The company took new initiatives to increase revenue even though exports have decreased slightly.

On Monday, Gemini Sea Food stated that it signed a deal with Lenk Frozen Foods (Asia) Company — a German based leading frozen food company – for the next two years, which will generate additional revenue of Tk50 crore every year.